N.Y. thrift asks: who needs high tech?

There isn't a computer in sight and the interior decor reminds a visitor of the 1950s.

Welcome to a branch of Manhattan Savings Bank, one of the most efficient financial institutions in the country.

Competing in a New York City market populated by some of the monsters of commercial banking, Manhattan Savings has used a cautious approach toward technology spending, while simultaneously attracting a stable deposit base with a unique retail strategy that focuses on the Geritol set.

Pied Piper at the Piano

In an industry that at times seems to have anointed automation as its savior, Manhattan Savings stands among a handful of institutions that have looked to other areas for solutions to the problems that plague their peers.

On a typical day at one of the thrift's flagship branches in uptown Manhattan, a pianist croons show tunes to a group of senior-citizen customers. A local artist's watercolors displayed in the window attract a small crowd on the busy sidewalk outside the branch.

A customer wandering through one the thrift's 27 branches in search of an automated teller machine will have a tough time finding one. Although Manhattan Savings belongs to several shared-ATM networks, customers have access to only three teller machines that it owns.

On closer examination, however, those customers will also find that the lines in the branches move amazingly fast, thanks to the army of tellers. And Manhattan Savings' long branch hours - extending from 8 a.m. to 7 p.m. Monday to Friday and 10 a.m. to 3 p.m. on Saturday - contrast sharply with other New York banks that offer cash machines instead of human beings to their retail customers.

Appearances May Be Deceiving

With all their social activity, the branches at times look more like community centers than financial institutions. But so long as they operate efficiently, that appearance is fine with Manhattan Savings officials.

"We've long had a policy of letting business build locally, and the entertainment has definitely furthered that goal," said John Tamberlane, president of Manhattan Savings Bank, a subsidiary of the $21 billion-asset Republic New York Corp. "If a piano player strengthens our position with our depositors, then why not have one?"

While Manhattan Savings' strategies for attracting and holding customers would probably not be right for every bank, analysts said its technology strategy might well hold some lessons for other institutions.

Tight Lid on Technology

The thrift calls its technology spending "selective." But analysts and others close to Manhattan Savings have suggested that "tight" might be a better term.

Manhattan Savings was one of the pioneers in installing branch automation for tellers, in the early 1980s. But it has been extremely cautious about investing in ATMs, platform automation, and other technologies that have become standard delivery mechanisms at most institutions.

For example, at the thrift's 86th Street branch - which has 25 tellers on duty during peak periods - the branch manager is considering installation of a prompting system that tells customers when the next teller is free. Such a system costs about $2,000; at most institutions, it is as common as the personal computer.

Strong Bottom-Line Defense

To answer those who would mock the caution of Manhattan Savings, analysts said this institution need only point to its bottom line.

"The bank is both pragmatic and frugal when it comes to laying out capital for technology - sometimes irritatingly so," said David Williamson, account manager at Systematics Inc., a Little Rock, Ark.-based dataprocessing company that manages Republic's computer operations. "But it is hard to argue with the kinds of numbers that they have posted over the last few years."

These numbers are indeed strong. Manhattan Savings' Tier 1 capital ratio of 10% is almost twice the average for commercial banks. And its first-quarter return on assets, 1.17%, dwarfs the 0.27% average for its fellow thrift institutions.

In addition, analysts said the Manhattan Savings maintains one of the most stable deposit bases in the country, while ranking No. 7 in 1990 in net income among savings institutions.

Prudent Decisionmaking

Industry watchers and bank officials credit much of the Manhattan Savings success to the implementation of a simple policy: If you don't need it, don't buy it.

"It's a testament to what prudence can do for you," said Richard Goleniewski, an analyst at Goldman, Sachs & Co. in New York. "When you take a look at their operating expense, you are going to do a double take - it's that unbelievable. And that's not where the success ends either."

Mr. Goleniewski said the caution Manhattan Savings exhibits in technology spending carries over into other areas, including investments. The thrift is remarkably untroubled by the problem loans plaguing most of the banking industry, he noted. Most of its loans are in high-quality residential mortgages.

In May of last year, when Manhattan Savings was acquired by Republic, it was promptly merged with the Williamsburgh Savings Bank, a previous acquisition. The resulting institution, known simply as Manhattan Savings, has deposits of over $5 billion.

Consolidations Continue

The formerly separate thrifts have been slow to merge their operations so far, but some consolidation of redundant branch offices should occur in the next few months, their officials said. At least part of the holdup seems to be that changing the name of Williamsburgh Savings - which is mainly in Brooklyn - is a slightly sticky issue.

"You probably couldn't pick a worse name to put in Brooklyn than Manhattan Savings," Mr. Tamberlane admitted. "But there are more important things than the name - like stability."

A large portion of Manhattan Savings' marketing efforts will continue to be directed toward attracting older customers. Even after the merger is complete, most branches will still feature express windows for cashing social security checks. The Renaissance Club, a savings plan for customers over 50, will also be continued.

So don't be surprised if most of the customers stay with this institution through the name change.

"I guess if it's a safe bank I don't care what they call it," said one elderly woman customer. "I hope they keep the piano, though - it's so cute."